SHAREHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Shareholders' Equity

On February 14, 2012, the Company's Board of Directors approved an 8 for 1 forward stock split of its Common Stock with a record date of March 1, 2012.  In connection with the stock split the Board of Directors also approved an increase in the Company’s authorized shares of Common Stock from 60,000,000 shares to 480,000,000 shares and its Preferred Stock from 10,000,000 to 80,000,000 shares.  Pursuant to Nevada Revised Statutes 78.207, a forward stock split that is conducted at the same time as a corresponding increase in the authorized shares of the Company’s capital stock does not require shareholder approval. The Company filed a Certificate of Change with the Nevada Secretary of State showing the changes to the Company's authorized capital stock on February 23, 2012, with an effective date of the close of business on February 29, 2012.  The stock split has been retroactively reflected in these financial statements.

On June 4, 2012, pursuant to the Merger Agreement with Xhibit Interactive, the Company issued 55,383,452 shares of its common stock to holders of Units of Xhibit Interactive.

On August 30, 2012 the Company’s Board of Directors adopted the Xhibit Corp. 2012 Stock Option Plan (“Plan”).  Under the Plan the Company may issue up to an aggregate total of 13,000,000 incentive or non-qualified options to purchase the Company’s common stock.

On September 24, 2012, pursuant to the Settlement and Release Agreement in conjunction with the Company’s acquisition of certain intellectual property rights related to its social media platform, the Company issued 727,050 shares of its common stock.

On January 11, 2013 the Company cancelled its $500,000 note payable due one of its shareholders.  In exchange for the cancellation, the Company issued 71,429 shares of common stock to the note holder and issued a new note in the amount of $250,000, which bears a 10% annual interest rate and has a maturity date of December 31, 2013. As a result, the Company recorded a loss on the conversion of debt in the amount of $32,145.

On January 14, 2013 the Company cancelled its $200,000 note payable due one of its shareholders.  In exchange for the cancellation, the Company issued 57,143 shares of common stock to the note holder. As a result, the Company recorded a loss on the conversion of debt in the amount of $34,286.

On May 16, 2013, pursuant to the SkyMall Merger Agreement with SHC, the Company issued 44,440,000 shares of its common stock to shareholders of SHC.  In addition, the Company issued 400,000 shares of its common stock on July 9, 2013 to an individual with a value of $1,600,000 (based upon the quoted trading price of $4.00 per share) as consideration for consulting services provided to the Company in connection with the SkyMall Merger.